The stock market is set to open tomorrow amid the surprising news that President Joe Biden will not seek reelection, a development that is expected to trigger significant volatility in the financial landscape.
As Democrats scramble to rally around a new candidate, the economic implications of Biden’s decision will take center stage. Biden has endorsed Vice President Kamala Harris as the potential nominee.
Josh Thompson, CEO of Impact Health USA, commented on the situation, stating that should Biden withdraw from the race, it would likely lead to market instability. “Investors tend to favor stability and predictability, and this major political shift could disrupt both,” he said in an interview.
In response to this uncertainty, investors may gravitate toward safe-haven assets, such as gold, silver, and the Swiss franc, as they typically offer more security during times of political upheaval.
Additionally, the so-called “Trump Trade,” which has gained momentum following recent events, could potentially lose traction. This trade reflects investor behavior influenced by expectations surrounding a second Trump administration. Donald Trump, having capitalized on his business-friendly policies during his presidency, is seen as benefitting sectors like healthcare, banking, cryptocurrency, oil stocks, Tesla, and the Trump Media and Technology Group.
Ed Mills, a Washington policy analyst at Raymond James, indicated that while Biden’s exit might cause a pause in the “Trump Trade,” he does not anticipate a broader market shift at this point. “Even if Biden exits, we would maintain our electoral odds at 60% Trump versus 40% Biden/Dem,” he noted in a message shared with CNBC last week.